Microsoft builds on carbon credit strategy with Mexican rainforest agreement

Microsoft has entered an agreement with Mexican startup Toroto to purchase 234,000 rainforest carbon credits – the latest in a series of carbon removal investments meant to offset the company’s growing carbon footprint.

Despite recently forming a new decarbonisation team made of former Google, WeWork and Meta subject experts, Microsoft is still betting heavily on carbon credits to offset part of its carbon footprint, which jumped by nearly 30% in 2023 due to its AI-driven data centre expansion.

Its latest investment is with Mexican startup Toroto, which develops and operates nature-based projects that absorb carbon from the atmosphere and generate carbon credits for purchase. Microsoft has agreed to buy 234,000 carbon credits issued under the Climate Action Reserve (CAR) Mexico Forest Protocol by one of Toroto’s projects in the state of Campeche. 

The project is located in the Conhuás ejido (community-owned land), in southeastern Mexico, and focuses on ecosystem restoration and safeguarding natural resources. Since 2021, it has promoted carbon sequestration in over 47,000 hectares of tropical rainforest, helping to protect endangered animals like the Baird's tapir and jaguar. Revenue from the sale of the credits to Microsoft is split between Toroto and the local community.

“The Conhuás project is an example of the potential for community-led ecosystem restoration to drive positive climate impact. We are pleased to collaborate with Toroto to help incentivise both natural ecosystem restoration and community-led climate action,” said Brian Marrs, Senior Director of Energy and Carbon Removal at Microsoft.

Microsoft carbon removal and natural capital investments

The company is part of a Big Tech coalition to develop 20 million tonnes of nature-based carbon credits by 2030, but also invests in different types of carbon removal credits individually – including a recent deal with Stockholm Exergi to remove 3.33 million tonnes of CO2 from the atmosphere using bio-energy with carbon capture and storage (BECCS).

In addition, Microsoft is also investing in startups focused on improving the methodology and reliability of nature-based climate solutions. Yesterday (September 11), Chief Sustainability Officer Melanie Nagakawa announced that Microsoft’s Climate Innovation Fund has invested in three of these companies: Yard Stick PBC (soil organic carbon measurement), Vibrant Planet (data-driven wildfire risk mitigation), and Farmland LP (regenerative agriculture).

“Natural climate solutions can contribute at least 30% of carbon emissions mitigation needed by 2030. And yet, it’s estimated nature-based climate adaptation receives only 5% of international climate funding. This drives a greater imperative to scale support for nature-based solutions and harness the power of data and technology to do so on a planetary scale. These 3 companies are tackling some of the most critical and complex problems in the climate space: how to measure, manage, and regenerate ecosystems,” she said.